U-Haul Holding Company Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Joe Shoen: Spoke about locking down moving truck and trailer CapEx, uncertainty with EV mandates, modest rental income growth, development of new storage products, and monitoring the storage industry's unrealistic promotions. Mentioned U-Box making progress with infrastructure in place and provided an update on Trian Fund Management's share acquisition, stating plans remain unchanged.
• Jason Berg: Reported second quarter earnings of $187 million vs $274 million last year, EPS $0.96 vs $1.40 last year. EBITDA at moving and storage segment decreased due to non-recurring operating costs. Highlighted equipment rental revenue growth, revised CapEx projection, self-storage revenue increase, and real estate investments and new square feet added.

Segment Performance

• Moving and Storage Segment: Equipment rental revenue saw an $18 million increase (about 1.7%), marking the second consecutive quarter of year-over-year growth. Capital expenditures for new rental equipment in the first six months were $1.156 billion, a $182 million increase from the same period last year. Fiscal 2025 full year net CapEx projection was revised upward from $1.90 billion to approximately $1.115 billion. Proceeds from sales of retired rental equipment dropped $44 million to $361 million.
• Self-storage: Revenues increased $16 million (about 8%). Average revenue per occupied foot rose ~1.6% quarter-over-quarter, with same-store up over 2%. Occupied unit count was up nearly 32,000 units, but 67,000 new units were added, leading to an average occupancy ratio of 80.9% (same-store 94.1%). Invested $734 million in real estate acquisitions and development costs in the first six months, a $101 million increase from last year. Added ~900,000 new net rentable square feet, 860,000 from newly developed locations.
• U-Box: Included in other revenue, increased $7 million, but not yet large enough to break out separately.

Guidance

• Increased fiscal 2025 full year net CapEx projection from $1.90 billion to approximately $1.115 billion due to additional equipment availability.
• Expect net rentable square feet deliveries to increase next quarter compared to the current quarter.

Risks

• Uncertainty around EV mandates affecting CapEx strategy.
• Declining resale values of rental equipment impacting proceeds from sales and depreciation.
• Self-storage industry beset by unrealistic moving promotions, affecting occupancy and revenue in some locations.
• Consumer confidence uncertainties impacting business outlook.

Question and Answer

• Q: Concerns about the next two quarters for the rental business and self-storage A: Joe Shoen stated no big changes were foreseen, but an additional trailer model would be introduced in late fourth quarter, potentially modestly helping trailer rentals. For self-storage, mentioned adding rooms faster than filling, but expects to outperform peer group with location-specific strategies.
• Q: Value gap in self-storage valuation A: Joe Shoen discussed excess capacity being a drag on earnings and aggressive development as a drag. Mentioned partitioning assets has had mixed results and the strategy is to combine U-Box, U-Haul in stores.